Let's grow up: Nevada needs more taxes

It's safe to assume the presidential race will be the most pressing matter on the minds of Nevadans when they go to the polls next November.

But while choosing the next commander in chief undoubtedly will be a melodrama of the first order, Nevadans could be equally transfixed by a few political issues closer to home.

Topping the list: two initiatives to raise the gaming tax.

One initiative would raise the gaming tax about 13 percentage points and eliminate property taxes for homeowners in the process. The other initiative would increase the gaming tax 3 percentage points with the new revenue going directly to teachers and schools.

Polls suggest both initiatives would garner strong voter support.

But it's also clear the casino industry is gearing up for the fight. Leading the charge is MGM Mirage Chairman Terry Lanni, who outlined his views at length during a recent Nevada Development Authority luncheon.

Lanni argued that instead of singling out the casinos, Nevada needs a broad-based tax that requires all businesses to make a contribution. "Surely we're all far too sophisticated to think that in today's social and economic climate, any one industry can be held responsible for providing for the needs of this ever-more-complex state," Lanni said.

The problem, however, isn't a matter of sophistication. What reasonable person would philosophically disagree with Lanni's assertion? But unfortunately, on the treacherous battleground of Nevada tax policy, reason rarely comes out on top.

Ideology and self-interest receive much higher priority than reason. It's no surprise that Lanni's call for a new broad-based business tax met with stony silence from most of the 800 business owners and managers who heard his speech. For those folks, the well-being of Nevada takes a back seat to the well-being of the quarterly report. If somebody has to pay, all the better if it's the other guy.

Sadly, voters tend to think this way as well.

And ideology has tripped up Lanni, of all people. As my colleague Jane Ann Morrison recently noted, Lanni supported Republican Jim Gibbons for Nevada governor. You'll recall that Gibbons ran on a simple platform: He would not raise any taxes at any time for any reason. Despite Lanni's sophisticated view of Nevada tax policy -- what he calls "an economy in a state of chaos" -- he supported the candidate who was determined to ignore the issue. Amazingly, Lanni told Morrison that he still supports Gibbons.

Yet the Democratic candidate, Dina Titus, was much more in sync with Lanni's views on state tax policy. Of course, it was out of the question that Lanni, a Republican Party stalwart, would support a Democrat for Nevada governor.

Be that as it may, Lanni is right: Gouging a single industry is a sorry -- and risky -- way to fund a state. Nevada desperately needs to elect some more grown-ups to assemble in Carson City and approve a sensible plan under which the tax burden is distributed among all industries, not just the casinos.

But it may be too late for reason. The initiative process, distasteful as it may be, tends to fill the vacuum left when elected lawmakers abdicate their responsibility.

Our lawmakers have not come close to adequately funding the public education system.

Nevada is ranked 49th in the country in school funding -- a fetid embarrassment.

Our lawmakers also have not come close to adequately funding the state's transportation needs. Before the last legislative session, Nevada transportation planners identified about $5 billion in vital transportation projects. The Legislature managed to cobble together one-fifth of that amount.

While these and other pressing needs go unmet, Gibbons has called for state agencies to identify 8 percent funding cuts in case tax revenues aren't sufficient to balance the budget next year.

As most of us know from personal experience, belt-tightening at times is a prudent or unavoidable reality. But in fast-growing Nevada in 2007, we ought to increase our investment in an array of areas, not cut back.

"We have to accept the fact that a no-tax environment is a relic of a bygone era," Lanni said. "If we all want to share in the ability to prosper in Nevada's vibrant environment of growth that shows no sign of slowing down, we all must share in the responsibility of reliably maintaining the infrastructure to support this environment."

Further, Lanni urged Nevada to make a greater commitment to education. Rather than settle for 49th in state education spending, he suggested we strive to make the top 10. (This, incidentally, is also much closer to Dina Titus' position than to that of Jim Gibbons.)

"Las Vegas is emerging as one of the great cities of the world," Lanni said. "Are we preparing our children to become the professionals capable of carrying our community to new heights?"

Lanni said he dislikes the initiative process, and that's a reasonable position to take. But I would offer a pragmatic suggestion: Hold your nose and launch a competing initiative to impose a broad-based business tax. If you can't beat 'em, join 'em.

The public might not buy it if the initiative comes off as purely a casino-driven response to the gaming tax initiatives. But if the gambling companies are able to join forces with several other industries to push a broad-based tax plan, maybe the other initiatives can be thwarted.

It's a tall order for Lanni or anybody else. For it to work, the width and breadth of the business community -- perhaps including this newspaper -- would have to defer ideology and self-interest and embrace a mature solution to Nevada's fiscal roller coaster.

Can it be done? It's a long shot. After all, there really is no business "community" here. Bringing together various industries to support a broad-based tax plan could be more difficult than building an international coalition to invade Iraq.

But the alternative is a hefty gaming tax hike that would unfairly target a single industry, let everyone else off the hook and exacerbate the chronic volatility of the state tax system.

Of course, assuming Lanni & Co. could get such a broad-based tax question on the ballot, it still will be up to Nevada voters, who might prefer to stick it to the casinos after all. Why they would want to do this is unclear to me, considering that Las Vegas probably would look something like Baker, Calif., today were it not for the rise of the casino industry.

There's a lot of truth to the adage that you get what you pay for. Right now, Nevada is paying dollar store prices and getting dollar store merchandise. Maybe we could get away with this slapdash tax system in decades past, when the state had just a few hundred thousand people. But with more than 2.5 million population, and with a growing desire to compete and to be taken seriously on the national stage, it's time to grow up.

Geoff Schumacher (gschumacher@reviewjournal.com) is Stephens Media's director of community publications. He is the author of "Sun, Sin & Suburbia: An Essential History of Modern Las Vegas" and, coming in February, "Howard Hughes: Power, Paranoia & Palace Intrigue." His column appears Sunday.